Transfer Pricing Terms Flashcards
Transfer Pricing
The setting of prices for transactions between related entities within a multinational corporation.
Arm’s Length Principle
The standard that transfer prices should be the same as those charged between unrelated parties under similar circumstances.
Comparable Uncontrolled Price (CUP) Method
A transfer pricing method that compares the price charged in a controlled transaction to the price charged in a comparable uncontrolled transaction.
Cost Plus Method
A transfer pricing method that adds an appropriate markup to the costs incurred by the supplier in a controlled transaction.
Resale Price Method
A transfer pricing method that determines the transfer price based on the resale price to an independent party, minus an appropriate gross margin.
Transactional Net Margin Method (TNMM)
A transfer pricing method that examines the net profit margin relative to an appropriate base (e.g., costs, sales) that a taxpayer realizes from a controlled transaction.
Profit Split Method
A transfer pricing method that allocates the combined profits from controlled transactions based on the relative value of each party’s contribution.
Functional Analysis
An analysis of the functions performed, risks assumed, and assets used by each party in a controlled transaction.
Benchmarking
The process of comparing a company’s transfer prices to those of comparable uncontrolled transactions.
Transfer Pricing Documentation
Documentation that supports the arm’s length nature of a company’s transfer pricing policies and practices.
Advance Pricing Agreement (APA)
An agreement between a taxpayer and tax authority on the appropriate transfer pricing methodology for future transactions.
Base Erosion and Profit Shifting (BEPS)
Strategies used by multinational companies to shift profits from high-tax jurisdictions to low-tax jurisdictions, eroding the tax base of the high-tax jurisdictions.
Country-by-Country Reporting (CbCR)
A BEPS initiative requiring multinational enterprises to report income, taxes paid, and other indicators of economic activity for each country in which they operate.
Controlled Transaction
A transaction between two related entities within a multinational corporation.
Uncontrolled Transaction
A transaction between two unrelated entities.
Comparable
An uncontrolled transaction or entity that is similar to the controlled transaction or entity being analyzed.
Intangible Property
Non-physical assets such as patents, trademarks, and copyrights that can be transferred between related entities.
Tangible Property
Physical assets such as machinery, equipment, and inventory that can be transferred between related entities.
Royalty
A payment made for the use of intangible property.
Intercompany Agreement
A contract between related entities that outlines the terms and conditions of their transactions.
Transfer Pricing Adjustment
An adjustment made by tax authorities to a company’s transfer prices to ensure they reflect arm’s length prices.
Transfer Pricing Risk
The risk that a company’s transfer pricing practices will be challenged by tax authorities.
Transfer Pricing Policy
A company’s approach to setting transfer prices for transactions between related entities.
Transfer Pricing Audit
An examination of a company’s transfer pricing practices by tax authorities.
Transfer Pricing Penalty
A fine imposed by tax authorities for non-compliance with transfer pricing regulations.
Transfer Pricing Dispute
A disagreement between a taxpayer and tax authorities over the appropriate transfer prices for controlled transactions.
Transfer Pricing Litigation
Legal proceedings to resolve a transfer pricing dispute.
Transfer Pricing Adjustment Mechanism
Procedures for making adjustments to transfer prices to ensure they reflect arm’s length prices.
Transfer Pricing Compliance
The process of ensuring that a company’s transfer pricing practices comply with tax regulations.
Transfer Pricing Strategy
A company’s plan for managing its transfer pricing practices to minimize tax risk and optimize tax outcomes.
Transfer Pricing Policy Framework
The set of principles and guidelines that govern a company’s transfer pricing practices.
Transfer Pricing Methodology
The approach used to determine the appropriate transfer prices for controlled transactions.
Transfer Pricing Study
An analysis conducted to determine the arm’s length nature of a company’s transfer prices.
Transfer Pricing Report
A document that summarizes the findings of a transfer pricing study.
Transfer Pricing Adjustment Notice
A notification from tax authorities that a company’s transfer prices have been adjusted.
Transfer Pricing Penalty Notice
A notification from tax authorities that a company has been fined for non-compliance with transfer pricing regulations.
Transfer Pricing Dispute Resolution
The process of resolving a transfer pricing dispute between a taxpayer and tax authorities.
Transfer Pricing Litigation Strategy
A company’s plan for managing transfer pricing litigation.
Transfer Pricing Adjustment Appeal
A request for a review of a transfer pricing adjustment by tax authorities.
Transfer Pricing Penalty Appeal
A request for a review of a transfer pricing penalty by tax authorities.
Transfer Pricing Dispute Settlement
The resolution of a transfer pricing dispute through negotiation or arbitration.
Transfer Pricing Litigation Settlement
The resolution of transfer pricing litigation through negotiation or arbitration.
Transfer Pricing Adjustment Settlement
The resolution of a transfer pricing adjustment through negotiation or arbitration.
Transfer Pricing Penalty Settlement
The resolution of a transfer pricing penalty through negotiation or arbitration.
Transfer Pricing Dispute Management
The process of managing transfer pricing disputes to minimize tax risk and optimize tax outcomes.
Transfer Pricing Litigation Management
The process of managing transfer pricing litigation to minimize tax risk and optimize tax outcomes.
Transfer Pricing Adjustment Management
The process of managing transfer pricing adjustments to minimize tax risk and optimize tax outcomes.
Transfer Pricing Penalty Management
The process of managing transfer pricing penalties to minimize tax risk and optimize tax outcomes.
Transfer Pricing Dispute Resolution Mechanism
Procedures for resolving transfer pricing disputes between taxpayers and tax authorities.
Transfer Pricing Litigation Resolution Mechanism
Procedures for resolving transfer pricing litigation between taxpayers and tax authorities.
Transfer Pricing Adjustment Resolution Mechanism
Procedures for resolving transfer pricing adjustments between taxpayers and tax authorities.
Transfer Pricing Penalty Resolution Mechanism
Procedures for resolving transfer pricing penalties between taxpayers and tax authorities.
Transfer Pricing Dispute Resolution Framework
The set of principles and guidelines that govern the resolution of transfer pricing disputes.
Transfer Pricing Litigation Resolution Framework
The set of principles and guidelines that govern the resolution of transfer pricing litigation.
Transfer Pricing Adjustment Resolution Framework
The set of principles and guidelines that govern the resolution of transfer pricing adjustments.
Transfer Pricing Penalty Resolution Framework
The set of principles and guidelines that govern the resolution of transfer pricing penalties.
Transfer Pricing Dispute Resolution Strategy
A company’s plan for managing transfer pricing disputes to minimize tax risk and optimize tax outcomes.
Transfer Pricing Litigation Resolution Strategy
